John Milanovich

Hello Aravind, sorry I am on the sell side commenting and not a HNW investor intrigued by your important focus on fees and investor alignment. I have seen this theme from you before first hand in Edmonton last year at the IAFP, hope to see you again this year. We agree generally with your view on fees but I think you should consider the fees not disclosed and not required to be disclosed; 2-4% borrower fees. This is generally the unknown unknown for most advisors. The OM's will state that the manager can receive fees for originating loans or mortgages but I am yet to see anywhere, where those fees are actually shown. This is a monumental conflict of interest that is the epicentre of dislocation between investor interests and the manager's interests. It is all one single cost to the borrower but as the OM states, the borrower origination, commitment, extension, exit and etc. fees are all paid by the borrower and not by the investors so who needs to know. Wait what? A basic assessment of credit risk is how much a borrower is willing to pay for a loan.  As an advisor, if you do not know how much the borrower is paying for the loan, you will not know how risky the credit/mortgage fund is. Keep up the great work. Cheers.

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Treasury yields were largely unchanged this past week with the Ten-Year Treasury yield moving lower by one basis point while the Two-Year Treasury yield increased by four basis points. Yields moved lower the first part of the week as the market was still focused on last week’s Non-Farm Payroll Report, and by Wednesday morning, the 10 Year Treasury yield fell to 4.43%. Yields reversed off that level after Minneapolis Fed President Neel Kashkari mentioned that the Fed could still hike interest rates if inflation ‘is imbedded or entrenched now at 3%’ as his comment indicated that he isn’t ready to cut interest rates yet. The 10 Year Treasury yield moved back above 4.50% again on Thursday, but moved lower after Initial Jobless Claims came in higher than expected and at their highest level since last August. A softening labor market could induce the Fed to cut interest rates even with inflation above the Fed’s target of 2% as Jerome Powell mentioned that specifically last week during the FOMC press conference. Friday morning, the 10 Year Treasury yield tested the 4.43% level for the second time this week, but rebounded off that level again after Fed Governor Michelle Bowman said that she doesn’t see the need for interest rate cuts this year. Yields increased further after the release of the University of Michigan Inflation Expectations survey came in higher than expected and at the highest level in six-months. Next week’s economic data is much more significant as PPI and CPI are released on Tuesday and Wednesday. While these reports won’t change the probability of a June interest rate cut, the reports could pull forward expectations of a July interest rate cut. Steven Englander from Standard Chartered pointed out that CPI may soon come in lower than expected as the Owner’s Equivalent Rent (OAR) component of CPI could substantially decrease. This would be very welcome by the Federal Reserve as Housing Costs have been one of the ‘stickier’ components of inflation. If CPI comes in lower than expected, then a July interest rate cut will become possible. There will be two more CPI reports after next week’s report, so if there are three positive reports on inflation, that would likely be enough for the Fed to cut interest rates. However, Steven Englander mentioned in his analysis that the predicted decline in OAR should happen, but it may not be in this month’s CPI release. July would still be a difficult time to adjust monetary policy even with better inflation data. The July FOMC meeting is between the Republican and Democratic Conventions and the Fed would like to avoid rate cuts being viewed as political. The Fed will also have the Jackson Hole Economic Symposium in August where they can promise an interest rate cut in September, and that may be just as good as an actual cut. ‘See You in September’ is still likely the top song at the Federal Reserve even if the market doesn't like it.

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“The best surprise is no surprise.” -         Kemmons Wilson, Founder, Holiday Inn It was no surprise that the Federal Open Market Committee (#FOMC) decided against making any changes to their target overnight rate at their May 1st meeting, leaving it at 5.50%. Market #expectations have moved materially since the beginning of the year. The belief then was that we would see six rate cuts by end of 2024, beginning in March, which we believed was a little too dovish. After Wednesday’s meeting, market pricing has changed again―the market doesn’t even expect to see two full 25 basis points (bps) rate cuts this year, with the first not materializing until November. In our view, perhaps the pendulum has swung a little too far the other way. The key message from Chair #Powell, however is that the next rate decision is clearly one-sided in favour of a cut. As noted by my colleague, Alex Grassino, “By means of background, the narrative around the Fed has shifted decisively since the last meeting six weeks ago, when the view was still very much that a mid-year cut was on the table. The reason? In essence, a combination of too-strong growth and stubbornly high MoM inflation for the first three months of 2024 would have made it difficult for the Fed to credibly ease in June, which has led to higher yields up to today, a stronger US dollar and volatility in the equity markets. Analysts also questioned other central banks’ ability to cut if the Fed were to drastically change track. At today’s meeting, Fed chair Powell went to considerable length to underscore that the next move would be a cut, effectively quashing a modest but growing line of thought that inflationary pressure would force the Fed to reintroduce two-sided risk around their decision-making function, meaning the next move could be a cut or a hike. The elimination of that possibility undercuts the source of recent market volatility, and it was immediately noticeable in markets: U.S. 10-year yields were down ~5bps at that time of writing, the entire curve was steepening, and the U.S. Dollar was slightly weaker.” Our take on the impact of rate moves to investors hasn’t changed: The uncertainty of timing and magnitude of future rate cuts, stickier inflation, and a weaker economic environment points to the need for a balanced approach to portfolio management with an emphasis on flexibility within the underlying investments. #Fed #interestrates #fixedincome #bonds #rates #equities #stocks #investments #financialadvisor #manulife

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10 Year Treasury Yield Slightly Up - See You At ICSC - https://lnkd.in/g57M2qnq #NetLease #Rates #1031 #ICSC ICSC

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Q1-2024 CU PERFORMANCE IS EASY TO EXPLAIN - AND IT'S NOT FOR THE REASON YOU MIGHT THINK": Q1-24 CU Peer Performance: https://lnkd.in/giiF9gjq Net operating return dropped from 0.62% to 0.51% ... But despite a 42bp increase in cost of funds (due to higher cost promotional CDs issued to combat liquidity needs), gross margin was UNCHANGED at 3.00% - so interest revenues were able to absorb higher interest expense. So the 11bp drop in Q1 return can be directly attributable to a 6bp increase in net operating expense and a 5bp increase in provision expense despite loan delinquency declining from 0.83% to 0.78% but net charge offs increasing from 0.61% to 0.80%

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In this week's #stockmarket update, Hennion & Walsh reviews recent economic data including #CPI and #PPI. We also provide our thoughts on how this recent data may affect future #Fed #InterestRate decisions. https://ow.ly/eRVt50Rgl5v

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Editors Note: Please be advised that during the period between Memorial Day until Labor Day Advisor Squawk will publish Monday thru Thursday. Here are the must-reads from today’s edition of Advisor Squawk (advisorsquawk.com). If you enjoy Advisor Squawk, please consider following our page on Linkedin. Brokers Seek to Circumvent FINRA’s Tightened Expungement Rules Researchers Find AI Model Outperforms Human Stock Forecasters FINRA Fines Thrivent $325K Over Forged E-Signatures Annuity Issuers Armor Up Against Private Equity Players Global Debt Has Grown to $315 Trillion This Year – Here’s How We Got Here The Perils of Self-Funding Long Term Care Advanced Strategies for Building Strong COI Relationships The Myth of the Multi-Step Sales Process AI and the Role of Technology in Improving Advisor Productivity … And 14 New Articles Covering Industry News, Practice Management and Compliance.

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Is this portfolio commentary, I quickly discuss three items: 1. I take a look at traditional election year patterns for the stock market. 2.I also discuss why I think the probability of a larger conflict has increased from 1.5% to 10% with the passage of the $95 billion package for Ukraine, Israel, and Taiwan. 3. I point out that small capitalization stocks are following a traditional recessionary recovery playbook. https://lnkd.in/eTaXbcaT https://lnkd.in/eR3RPJgV #stockmarket #recession

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What’s a T1 settlement got to do with it? When we talk about a T1 settlement, we’re really referring to the trade settlement for securities in the investment industry. The security cycle has shortened by a day, but what does that mean for you? When I started in this industry, we had a T+5 settlement date. This meant that if you sold something, you wouldn’t see that money for another 5 days, so you really had to plan ahead. Over the course of my career, I’ve seen the cycle slowly shorten, with the goal of improving market efficiency and reducing risk. Portfolio managers are excited about the shift, and I’m excited to share a bit more about why! Subscribe on YouTube for more videos like this one! https://lnkd.in/dwceikZq #personalfinance #moneytips #powerfulmoneyhabits #smartermoneyhabits #whatsblankgottodowithit #financialadvisor #wealthadvisor #investingininclusivity #t1settlement #marketchanges #tradeeasier #securitycycle

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Dear Friends, Here is my most recent APRIL 2024 Market Commentary. IS THE ECONOMY REALLY AS GOOD AS THE GOVERNMENT CLAIMS? We are living through a historic 15-year bull market that may be holding off a recession. Unless the laws of the economic business cycle have been suspended, indicators are signaling a bear market recession coming soon. In my April report, I explain the reasons a recession has been delayed, but is still on the horizon. Among them, the $11+ trillion in stimulus dollars that have poured into the economy since 2020. Economists have estimated that two-thirds of last year’s GDP growth was directly or indirectly tied to stimulus dollars. And, while many Americans enjoyed excess savings in the wake of these stimulus programs, consumer credit card debt is now at record levels. Many indicators are still warning of an overvalued stock market. Learn more in my most recent Market Commentary. https://lnkd.in/ehnwZmPv

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Week Ahead: This week features a modest slate of economic indicators spanning business production, real estate, and consumer sectors. Within business production, we are observing business inventories, industrial production, capacity utilization, and the U.S. Leading Economic Indicators, with a particular emphasis on manufacturing. Real estate metrics include the Home Builder Confidence Index, housing starts, and building permits, which are crucial as they indicate an uptick in efforts to bolster housing supply—a critical need in the current market. Consumer data is highlighted by U.S. retail sales, which recently reported a notable increase of 0.7%, and initial jobless claims that provide insights into employment trends affecting consumer demand. Recent data shows that the manufacturing sector has returned to expansion, as evidenced by the latest manufacturing PMIs. This positive trend is expected to be mirrored in the related industrial production figures, which also encompass mining and utilities. The real estate sector is adapting to the new higher rate environment, signaling a positive response to interest rate adjustments with increased activity aimed at expanding housing supply. Moreover, the U.S. Leading Economic Indicators have shown improvement, moving back into expansion after a period of contraction. While these indicators have a strong manufacturing focus and the U.S. economy is predominantly service-oriented, making them less predictive of overall economic recessions, they remain a valuable barometer for the manufacturing sector. Given the positive manufacturing PMIs, alongside bullish signals from the stock market and a flattening yield curve, it is reasonable to anticipate that these indicators will sustain their expansionary trajectory for the second consecutive month.

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Correlation between activist investing and insanity? We (ZimCal) are a credit investor not an activist and typically are only in private companies. Occasionally, we've had positions in publics and 3 years ago, invested in subordinated debt issued by Medallion Financial ("MFIN"). Shocked (and frightened) by management's casual/incomplete responses to pre-delivered questions in December 2023, we realized that launching an activist campaign was the only way to get board change and specifically, have management think through future risks. Wow! It's been an interesting ride... Personal attacks, insinuations, fearmongering... We expected hostility, but we did (naively) think that the issues would also be debated. That list of their responses sounds like a political strategy, and it is. Because then the issues become irrelevant, and it boils down to either who you want to believe and/or who you hate/fear. Didn't realize I was in politics! You've got 3 members of an 8 person board in the same family, with Dad as CEO/Chairman and son (who runs MFIN) as President. You've got an SEC complaint against the son alleging fraud, inflating a subsidiary value, touting their stock, and lying to auditors. You've got 4Q23 and 1Q24 consumer charge-offs at a decade high (despite strong consumer health). You've got the President paying himself $6.5 million at FY23 for a $2.6 billion asset FDIC-insured indirect consumer lender with no branches and 150ish employees... My banker CEO/President friends, let that one sink in for a second. $6.5 million. I could go on and on. Despite all that, this is by no means a slam dunk. Long story short, to be in this investment strategy might require a certain level of insanity - but definitely worth it if you can get the changes. See usual disclaimers at

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South Atlantic Capital's latest Newsletter

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Welcome to Episode 2 of ‘Treasury is Fed, Fed is Treasury,’ or TIFFIT for short. In this Episode we delve into Pandemic inflation and the challenges it continues to pose for the Fed in achieving its 2% inflation target while TIFFIT liquidity is set to ‘on’. Remember to check your feed every day at 10.00am for a new episode, with the conclusion this Friday. May the TIFFIT be with you! #money #management #markets #investing #technology #india #future #finance #executivesandmanagement #businessintelligence #fundraising #strategy #finances #managementconsulting #business #venturecapital #entrepreneurship #economy #gold #silver #bitcoin

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Markets continued to rebound last week as Powell writes off rate hikes // AAPL and AMZN deliver while BRK finds strength in insurance, cash pile // Fed Speak and more earnings in the week ahead! LISTEN below for more.

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